The stock market has been anything but stable in April. A sharp sell-off occurred due the imposition of high tariffs. Then the market partially recovered in one afternoon as the tax on goods was largely paused. However, this was short-lived amid a tariff race with China. Year-to-date through April 10, the S&P 500 index was down 10%. For some investors, the relative safety of companies with growing dividends can provide some comfort from the volatility.
Many Companies Boosted Dividend Payments in Early 2025
According to S&P Dow Jones Indices, 758 U.S. companies announced dividend increases in the first quarter of 2025. While this is 4.8% fewer companies that had hikes a year earlier, I view this as a positive sign. Many companies had financial stability heading into April. Within the S&P 500 universe, 128 companies boosted their dividend payments in the first quarter.
Recent large-cap dividend increases were most common within the industrials and financial sectors. Both had more than 20 constituents increase their annual payments to shareholders. Other sectors with a dividend growth focus were consumer discretionary, real estate, and utilities. These sectors had more than a dozen companies with a hike.
The breadth of companies raising dividends highlights the benefits of using ETFs to gain exposure. There are a range of dividend growth ETFs to consider. Some track an index based on dividend records. Meanwhile, others are actively managed and use a forward-looking approach. Let’s look at a few of them.
Dividend Track Records Matter
The SPDR S&P Dividend ETF (SDY ) owns companies in the S&P 1500 with a 20-year-plus record of dividend growth. Consumer staples (18% of assets), industrials (18%), and utilities (17%) were well-represented in the ETF. Holdings included Consolidated Edison, Kimberly Clark, and Southern Company are a few examples. SDY was down just 3.9% as of April 10.
Meanwhile, the Vanguard Dividend Appreciation ETF (VIG ) declined 6.8% to start the year. This ETF holds companies with a 10-year record of dividend growth. This shorter record has resulted in notable sector differences for VIG and SDY. Information technology (24%) and financial (23%) are the two largest sectors for VIG and are more cyclical. Meanwhile, utilities represented just 2.1% of the assets. Apple, Broadcom, and JPMorgan Chase were some of the larger SDY holdings.
Taking an Active ETF Approach With Dividends
Dividends are not guaranteed, particularly in a rapidly shifting economic environment. So some investors might prefer to work with an actively managed ETF. The teams behind these ETFs are making forecasts as to what companies have the financial strength to maintain, let alone grow, payments.
The T. Rowe Price Dividend Growth ETF (TDVG ) is one example. Manager Thomas Huber actively selects shares of companies with strong dividend attributes that can grow. At the end of the first quarter, Chubb, Eli Lilly, Walmart. and Visa were among the fund’s top 0 holdings. The fund was down 4.4% year-to-date through April 10.
While S&P Dow Jones Indices data reflects dividend growth in the U.S., the trend occurs in other countries. To capture this, the Capital Group Dividend Growers ETF (CGDG ) invests approximately half of its assets outside the U.S. The quarter of managers look worldwide for long-term dividend growth potential. Centerpoint Energy and Philip Morris International were recently joined by Banca Generali and SAP. CGDG was down only 1.2% to start the year. Capital Group has seen demand for this global approach.
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